The drivers of China’s green shift

China has had a bad reputation when it comes to environmental protections. But one expert argues China is leading the way in a “global green shift” through its adoption of renewable energy sources - with the alternative too dangerous for the country to consider.

Talk about China and the environment, and the image that comes to mind may be of the Beijing smog, or factories belching out smoke.

That’s the view of Professor John Mathews, whose book Global Green Shift makes the case that it is China that is now leading the way when it comes to the move from fossil fuels to renewable energy.

Mathews, who teaches strategy at the Macquarie Graduate School of Management in Sydney, says the rest of the world gets the wrong impression when it looks simply at China’s level of emissions.

“Of course China got a very bad rap from the Copenhagen climate conference, when it was seen as blocking stringent controls on emissions, but the point I've been making is that China has not really been focused at all on emissions as such but making its energy system more secure.”

That goal has led it to turn to renewable energy, as it was “like manufacturing your own energy system” - which conveniently for the rest of the world, is good for the environment.

Top-down shift

The shift has come from the top down, with Chinese President Xi Jinping adopting “ecological civilisation” as a slogan and the government boosting its investments in the renewables sector.

Mathews says there are a number of reasons underpinning China’s move into the green energy space.

Closest to home, there are increasingly high expectations from the country’s citizens that the issue of poor air, water and soil quality must be dealt with.

“The Chinese government seems to be driven by overwhelming domestic problem of domestic pollution. They have to clean that up, and renewable power and electric vehicles are clearly an important way of clearing up that shocking record. “

Farther afield, there has an opportunity for China to take a leadership role in climate change spaces as the United States steps back under President Donald Trump. Trump, who has expressed scepticism in the past about climate change, and suggested the concept of global warming was created by the Chinese, pulled the US out of the Paris climate deal.

The Chinese “must just be hugging themselves” in private, Mathews says, with the US handing over world leadership in emerging industries and markets to China.

“A year ago, it looked as if China would have to fight hard to be a world leader in these fields - the Trump administration has just made it so much easier for China to do this.”

Moving from imitation to innovation

Then there are the business opportunities, with China focusing on the renewables industries and export opportunities to other countries.

Mathews says strategic emerging industries like electric vehicles and energy storage have been identified in successive five-year plans by the Chinese government, which is “very much alive to being a business supplier to the rest of the market”.

With a move “from imitation to innovation”, China is trying to increase the quality of its products and export technology with proper patents. Mathews says that opens up opportunities for companies in New Zealand to partner up with Chinese firms on products like electric vehicles.

Another opportunity for New Zealand may come through the Belt and Road Initiative, the trillion-dollar initiative to build infrastructure and other links between China and the rest of the world. Mathews says Beijing is focused on infrastructure as driver of its development strategy, with renewables playing important role in that. He notes that some critics have expressed concerns about China using Belt and Road to “dump dirty energy projects on the rest of the world”.

It’s an accusation not necessarily without merit: according to one report, China is backing more than 100 new coal-fired plants in Belt and Road countries.

While Mathews says there is a status quo of black energy in China and in developing countries, it is more important to look at “the leading edge where it’s greener than blacker”.

“That's what's transforming a black system into a green system, and that’s where the opportunities are going to be.”

'Endless stumbling blocks'

That’s not to say China’s transition towards green energy has been, or will be, seamless. As Mathews acknowledges, there are “endless stumbling blocks” given the size of the country.

“It’s the most difficult transition that we as an industrial civilisation has ever attempted - this makes the industrial revolution of 200 to 300 years ago look like small fry.”

The existing fossil fuel infrastructure built in recent years will also act as a powerful obstacle to transition attempts, he says. However, he argues China has a strategy in place to overcome those obstacles, with its focus on investment in new sectors, standards and technologies to open up the market for new players.

Then there are the possible consequences if China fails to move away from fossil fuels.

“At the scale which we’re talking...it becomes clear that China really has no option but to go green.”

Mathews says there are geopolitical, rather than physical, limits to China’s growth if it continues down the current path.

It would need to rely on importing oil, coal and gas from “hotspot countries” like Nigeria, South Sudan, Ecuador and Venezuela, which were susceptible to instability.

“What that would mean was China becoming vulnerable to those hotspots in the world, triggering civil wars, revolutions, terrorism, and all of that which would make life extremely difficult for China and for other countries.”

While countries like South Korea and Taiwan haven’t faced similar issues because they are relatively small, it’s altogether different for China.

“At the scale which we’re talking for China's transition, it has to consider those geopolitical limits and when it does so seriously, it becomes clear that China really has no option but to go green.”

Professor John Mathews is delivering a presentation on China’s green shift on September 20 as part of the University of Auckland’s Energy Matters series. For more details, click here. He is also speaking at a BusinessNZ lunchtime session in Wellington on September 22.

The University of Auckland is a foundation supporter and sponsor of Newsroom.

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